EUR/USD, gold, S&P 500 analysis: Commitment of traders report (COT)
Commitment of traders – as of Tuesday 23rd May 2023:
- Traders reduced net-long exposure to EUR/USD futures by -13.4k contracts (-7.1%)
- Net-short exposure to JPY futures rose to a 30-week high
- Net-short exposure to CHF futures fell to just -903 contracts (lowest since September 2021)
- NZD futures traders were on the cusp of flipping to net-long exposure ahead of the RBNZ meeting
EUR/USD futures: Commitment of traders (COT)
We highlighted the potential for a sentiment extreme on EUR/USD futures, and it appears as though bulls are seriously questioning their net-long exposure. A combination of trimmed longs and new shorts saw net-long exposure decline for the first week in six, and at its fastest pace in nearly a year at -13.4k contracts (or -7.1%). 8.7k long contracts were closed and 4.7k long contracts were added. And we see the potential for further longs to be closed out in the week/s ahead, as bets on a 25bp Fed hike in June now sit at an ~655 probability, according to Fed Fund futures pricing.
Commitment of traders – as of Tuesday 23rd May 2023:
- Net-short exposure to the S&P 500 futures printed its second most bearish level on record
- Net-long exposure to Nasdaq and Dow Jones futures were trimmed for a second week
- Large speculators were their most bearish on the 10-year bond futures contract on record
S&P 500 futures: Commitment of traders (COT)
Like EUR/USD, we have been warning of a potential sentiment extreme on the S&P 500 futures market. Last week, large speculators were their most bearish on S&P 500 futures at their second highest level on record, since late 2007. However, if we look closer at the data we can see that short-covering has mostly explained the rise in prices over the past 10 weeks and long exposure has remained mostly flat. But with such extreme positioning it still leaves plenty of room for further gains if shorts cover and / or longs join the party. We have a three-day weekend in the US so markets are closed on Monday, and that leaves four more days this week to see if the S&P 500 can break above last week’s high and make a run for the August 2022 high.
Commitment of traders – as of Tuesday 23rd May 2023
- Large speculators trimmed net-long exposure to gold for a second week (fastest weekly pace in three months)
- Managed funds reduced bet-long exposure to gold futures for a third week
- Net-short exposure to palladium futures rose to a 4-week high
Gold futures (GC): Commitment of traders (COT)
The deal that had to happen looks set to actually happen, and that means gold will lose some of its appeal as a safe-haven asset. But we’ve already seen traders anticipate this over the last couple of weeks, with large speculators and managed funds trimming gross long exposure to gold and increase short bets. And with Fed Fund futures now implying an ~65% chance of a Fed hike in June, the US dollar was allowed to rise for a third week and weigh on gold prices. However, there is strong technical support around 1934 which helped it retrace, despite the stronger US dollar. And we see the potential for a corrective bounce to the 1950 – 1960 area before we see a break support.
How to trade with City Index
You can easily trade with City Index by using these four easy steps:
-
Open an account, or log in if you’re already a customer
• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore
- Search for the company you want to trade in our award-winning platform
- Choose your position and size, and your stop and limit levels
- Place the trade
StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.
For further details see our full non-independent research disclaimer and quarterly summary.
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.
City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.
City Index is a trademark of StoneX Financial Ltd.
The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.
© City Index 2024